BSM Valuation

Okay so as we’re now in the New Year I thought I’d start anew thread.

I lot of people have been asking why invest in BSM now, andthe answer I can provide (for me) is that it still has multi-baggerpotential within 18 months. The only thing that has changed is that theshareholder base has been slightly diluted at a much lower price than ideal.Later this year Bass should start ramping up production, aiming to hit20,000+ by early next year. Plugging in some very rough numbers, I comeup with a P/L (once operating at above 20,000 – maybe 22,000) of something likethis:

Assumptions
Price/mt (USD)	1,000
Costs/mt at full volume (USD)	400
Corporate costs	4,000,000
PER	10
Forecast production (mtpa)	22,000
Exchange Rate (USD)	0.71
P/L with full year of full production	$
Annualised sales (USD)	22,000,000
Annualised sales (AUD)	30,985,915
COGS	-8,800,000
Gross profit	22,185,915
Corporate costs	-4,000,000
Net profit	18,185,915
Market capitalisation	181,859,155
Current market cap	35,890,000
Multiple on current cap	5.1

 

Now I may well have got some numbers wrong here so I’m morethan open to constructive correction. I also want to stress that there are manyrisks with small cap investing (as others have mentioned), and there could wellbe further delays. The expansion needs to be fully financed (and it’s onlypartially financed at the moment), and there will be another capital raisingdown the track.

However I derive confidence from the existing production,local knowledge, operations, foreign labour force, OHS, existing customers andsales contracts etc. The risk of a jump from 6,000 to 20,000+ is much smallerthan getting from 0 to 6,000 in the first place.

So DYOR and correct any of my figures/assumptions above. IFeverything goes to plan (and that is a big IF), then the market cap should be many multiples of the the current market cap – even assuming no lithium etc, within 18 months.